Peter Kiewit's Motto

I grew up in South Louisiana, a region battered by Hurricane Katrina. With recovery efforts underway, a friend drove me to the job site of a company building some massive pump stations for the Army Corps of Engineers. At the end of a winding stone access road through the marsh, I saw one of the most organized projects I had ever witnessed with hundreds of construction professionals in a massive and meticulously clean work environment. There were a ton of yellow and black trucks. I had never seen anything like it and haven’t since. Kiewit had come to town.

The late Peter Kiewit began with a bricklaying company started by his grandfather. He grew Peter Kiewit and Sons into a diversified contracting behemoth. Their iconic corporate culture and humble Midwest roots later extended globally prior to his death in 1979. His legend lives on and today Kiewit’s resume speaks for itself. Hate ‘em or love ‘em, their overall success is hard to argue with.

One of Peter Kiewit’s mottos was “Know your costs”.

In the early 20th century, he engineered a weekly job cost monitoring system to compare actual costs to bid estimates. This information empowered the teams with actionable cost data and enabled him to forecast the company’s profitability. That’s how much cost mattered to him.

After World War II, he established the following “Key Kiewit Philosophy”:

1. We improve as we learn

2. How to secure work at the right price

3. How to build work at the lowest cost

4. How to staff our work with the right people
   

A century later, contractors all are still working on these “Big 4”. In keeping with that, below are a few Winning Habits collected from the experiences of some best in class highway contractors:

1. NSLI

Never Stop Learning and Improving. Estimator scorecards and post bid analyses provide opportunities to learn, iterate, and get better. Humility, curiosity, and avoidance of “the bid is ours” thinking help set the tone.

2. Deploy great digital estimating and cost systems

Systems that enable efficient and transparent surfacing of budget to actual labor, equipment, trucking, and material cost by job by cost code on a daily, weekly, and monthly basis will drive results. Daily profit and loss reporting improves the likelihood of cost, including potential change orders, being charged to the correct code, type, and phase. Bad data from the field is a link that breaks the chain. As someone who reviewed timesheets (some even handwritten) daily for years, I was flat amazed at how often they needed fixing, despite the best intentions.

3. Analyze gain/fade and act on it

Analysis of job gain/fade on “Work-in-Progress” (WIP) reporting. Understanding the why and building a feedback loop between cost and estimates are beneficial practices. Fight the natural tendency to blur the lines: Cost is cost, and margin is margin. It is tough to select the right price on current bids while lacking confidence in the cost.

4. After action reviews

For major bids, operations, and jobs. How did it go? What did we learn? What was possible? How should we apply these learnings moving forward? These are opportunities to improve collaboration across teams.

5. Adjustable unit cost KPI’s

Labor rates, equipment rates, trucking rates, and materials all change from period to period and from job to job based upon a variety of factors. Consistent rate tables including indirect cost budget and allocation improve accuracy. Tracking and forecasting future adjustable costs (e.g., average roller operator cost per hour) are becoming more important with inflation and the unemployment environment, regardless of job specific minimum wage rates.

6. Fixed unit cost KPI’s

Average daily production rates, labor hours per unit, trucking hours per unit, and material yields are generally transferable to future work depending on the conditions. Contractors tracking these KPI’s monthly, quarterly, and annually will gain useful insight.

7. Prioritize handoffs

Some folks both bid and build the work while others have separate teams for each. For the latter, handoff processes between estimating and construction teams are critical. The pros and cons of a “bid-build-collect” model compared to separate estimating and construction functions is a debated issue. Performance depends on efficient estimating, field, and accounting workflows and communication.

These habits are not a catch all. Contractors with integrated systems and consistency can expect the best results today and in the future. Knowing your true cost involves art, science, intuition, teamwork, and honesty with oneself. This is a journey full of perpetual learning. A contracting forefather, Peter Kiewit, thought that it was a fundamental building block of success, and he was right.

CR Jackson 🥳👏🤩

We’re thrilled be working with the innovative team at CR Jackson. This is an exciting partnership!

Stoic Wisdom Quote:

“Stay close to the tree so you can be there when stuff falls.”

Jensen Huang, CEO of Nvidia

(classic jensen clip below)

Reflect on this as we embark on another week of bidding and building!

We value your feedback. Tell us what you think about this week’s newsletter below!

Warmly,

Tristan

About the Author

Tristan Wilson is the CEO and Co-Founder of Edgevanta. We make software that helps contractors win more work at the right price. He is a 4th Generation Contractor, construction enthusiast, bidding nerd, ultramarathoner, and paving nut. He worked his way up the ladder at Allan Myers in the Mid-Atlantic and his family’s former business Barriere Construction before starting Edgevanta in Nashville, where the company is based. Reach out to him at [email protected]